Suppose That a Vaccine Is Developed for a Highly Contagious

question 60

Multiple Choice

Suppose that a vaccine is developed for a highly contagious strain of flu. The likelihood that anyone will get this flu decreases as more people receive the vaccine. One of the demand curves below represents the private demand for the vaccine and the other represents the social demand for the vaccine. The government could increase total economic surplus by:

• A)taxing production of the vaccine.
• B)encouraging people to pay each other to get the vaccine.
• C)subsidizing production of the vaccine.
• D)providing 250 doses of the vaccine for free.

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Definitions:

Scarce Resources

Resources that are limited in availability and are not sufficient to satisfy all the various ways a society wants to use them.

Efficient Market

a market hypothesis asserting that asset prices fully reflect all available information, making it impossible to consistently achieve higher returns.

Free Lunch

An expression indicating that it is impossible to get something for nothing, emphasizing that every choice involves a cost, even if it is not immediately apparent.

Opportunity Cost

The cost of foregone alternatives when one option is chosen over another.